The overall role of NK cells in HCV infection is not well understood. Immunogenetic studies suggest that distinct haplotypes of killer cell immunoglobulin-like receptors (KIRs) and their HLA ligands influence the outcome of acute and chronic HCV infection. Homozygosity for KIR2DL3 and HLA-C group 1 alleles, for example, is associated with an increased likelihood of HCV clearance, whereas KIR2DS3 is associated with an increased risk of liver injury in chronic HCV infection. These associations are probably the result of differential NK cell activation and function due to KIR/HLA interaction. As shown in vitro, NK cells from subjects with KIR2DL3 and HLA-C group 1 compound genotype respond faster and more efficiently to influenza A virus infection than NK cells from subjects with less favorable genotypes. Importantly, activated NK cells have also been shown to recognize and lyse HCV replicon-containing hepatoma cells in vitro and should therefore be able of recognizing and killing HCV-infected hepatocytes in vivo. However, published data is controversial in regards to up- or downregulation of specific NK cell markers and NK cell effector functions in HCV infection. Furthermore, the mechanisms underlying these phenotypic and/or functional changes remain unknown. While it has been proposed that individual HCV proteins alter NK cell functions based on in vitro assays, it should be noted that HCV-infected hepatocytes do not secrete soluble viral proteins and that HCV particles with either genotype 1a or 2a envelope proteins do not directly modulate NK cell function. The current study was designed to analyze the phenotype and function of NK cells in liver and blood of patients with chronic HCV infection. HCV-infected patients displayed more NK cells expressing activation markers NKp46 (61 vs 46%), TRAIL (4 vs 2%) and NKG2C (10 vs 5%) than uninfected controls (p<0.05). The frequency of activated NK cells was higher in the liver than in the blood (p<0.05) and there was a stepwise increase in activation from uninfected controls to patients with normal ALT (<41 U/ml) to patients with elevated ALT, indicating an association of NK cell activity and disease activity. To assess NK cell function we studied IFN-gamma production and degranulation, a marker for cytotoxicity. Whereas NK cell degranulation was greater in patients with elevated ALT than that those with normal ALT (23 vs 12%;p<0.05) or uninfected controls (23 vs 15%;p<0.05), IFN-gamma production did not differ among the groups. This suggested polarization of NK cell function with increased cytotoxicity due to degranulation and TRAIL expression, but without increased production of antiviral IFN-gamma. To test whether the polarized NK cell function was due to in vivo exposure to HCV-induced IFN-alpha, we stimulated NK cells from healthy controls with IFN-alpha. Similar to what we had observed ex vivo for NK cells of HCV-infected patients, in vitro exposure of NK cells to IFN-alpha increased TRAIL expression (2 vs 13%;p<0.0001) and degranulation (13 vs 42%;p<0.0001) without change in IFN-gamma production. Finally, we quantified the IFN-gamma-induced chemokines IP-10 and MIG in the patient cohort as surrogate markers for IFN-alpha, which is rarely detectable in serum. Indeed, HCV-infected patients with elevated ALT displayed higher IP-10 and MIG levels than those with normal ALT and healthy controls (p<0.0005). A similar correlation was observed for histological inflammatory activity (p<0.05). Our results provide new insights into the role of NK cells in the pathogenesis of chronic hepatitis C, suggesting they are associated with liver inflammation but adopt a polarized phenotype due to chronic exposure to endogenous IFN-alpha.